HEFTY council tax rises loomed closer in North Wales last night as the Assembly government confirmed a &#xA3;3.2bn cash settlement for local services next year.

County hall officials were considering the implications of an average 5pc rise in spending support amid warnings of inflation-busting tax rises or cuts in some services.

Pressure from extra pay spending in schools, on the workload agreement and a performance threshold pay deal for teachers, was likely to put the squeeze on other services.

Wrexham finance director Martyn Scholes said that the settlement was "a lot less than we were hoping for".

"It is clearly going to be difficult to meet the public's expectations of improved local services while keeping council tax increase to a reasonable level."

Plaid Cymru-run Gwynedd council said: "This level of settlement is unlikely to provide scope for growth."

And Conwy finance director Ken Finch said: "A 4pc increase in Conwy's revenue settlement grant is likely to be insufficient to meet pay and inflation costs to deliver services at their current levels."

Extra funds are available to two North Wales councils for Private Finance Initiative building schemes. In Conwy, the overall increase rises to

7.1pc including PFI funding for three new schools and in Denbighshire to 8.1pc, including money for a new office complex in Ruthin.

Assembly Finance and Local Government Minister Sue Essex insisted that the Wales-wide increase of 5pc, at twice the rate of inflation, was a fair deal.

Special grants on top of spending support included &#xA3;20m for the most deprived areas of Wales.

The Minister also pledged an extra &#xA3;30m for councils which perform best in delivering the Assembly government's priorities in health, the economy and tackling poverty.

Ms Essex said that she had listened to the worries of council leaders over the cost of extra classroom assistants to free teachers from the burden of routine administration and allocated &#xA3;33m.

Sir Harry Jones, Labour leader of the Welsh Local Government Association warned last week that the provisional budget could have "huge and damaging repercussions across Wales".